AUTOSHOW-Japan car makers seek to keep tech lead as yen bites

Newswire

By Chang-Ran Kim, Asia autos correspondent

TOKYO, Nov 30 (Reuters) - Japanese automakers unveiled
futuristic concepts such as car-powered houses and rechargeable
sports cars at the Tokyo Motor Show, but the stubbornly strong yen
cast a pall over the industry, threatening their chances of keeping
the lead in next-generation technology.

The biennial auto show, which opened to the media on Wednesday,
showcased the usual array of green cars such as electric vehicles
(EVs) and fuel-cell cars, while top Japanese brands went further to
depict how cars could eventually link up to the grid and store
energy in their batteries as a power source.

The idea of capturing solar power or unused and cheaper
nighttime electricity in cars to power households has gained
traction in Japan after the March 11 earthquake and tsunami cut off
power to millions of households and triggered a nuclear power
crisis.

But the prolonged strength of the yen, at around 78 to the
dollar now, has eroded profits in Japanese automakers' domestic
market, hurting competition against rivals such as South Korea's
Hyundai Motor Co and Germany's Volkswagen AG globally.

"The biggest worry I have right now is, yes, Japanese automakers
have a lot of excellence in technology and manufacturing, but will
they keep that excellence?" said Christopher Richter, an auto
analyst at CLSA Asia-Pacific Markets.

"Building new technology requires money. If you're cash-starved,
your global competitors aren't going to cut you any slack from the
difficulties in Japan. If (Japanese automakers) don't change,
there's going to be a slow erosion of competitive advantage which
they can ill-afford."

Japanese car makers are wrapping up a year of unprecedented
challenges including the disasters at home and disruption also from
the Thai floods, but the yen's appreciation against virtually all
other currencies has posed the biggest headache.

'HELP US STOP THIS'

Japan is known for its expertise in "monozukuri", or
manufacturing, and is also a breeding ground for high-tech parts,
especially in electronics from makers such as Denso Corp --
strengths that executives from Volkswagen and BMW AG acknowledged
in Tokyo this week.

But executives have also warned that without a reversal in
exchange rates, they would be forced to reduce exports from Japan,
which would then slash overall production because the sliding
domestic market cannot make up the difference.

"Our base and our roots are in Japan, and our strengths are in
Japan. So we have absolutely no interest in moving out," Nissan
Motor Co CEO Carlos Ghosn told reporters.

Ghosn went on to give an impassioned warning that the strong yen
would ultimately hurt the country more than it would hurt Japanese
car makers, which had the option of shifting operations abroad. If
Tokyo continued without strong action on the yen, he said, half of
the 4 to 5 million Japanese jobs responsible for exported vehicles
could be at risk.

Ghosn, who also heads Renault SA, said Tokyo could learn from
Switzerland, which had succeeded in stemming the Swiss Franc's rise
as investors took flight from the euro.

"Switzerland is a great benchmark about how a small country --
much smaller than Japan -- at a certain point in time they drew a
line in the sand and they said, 'Enough is enough'. Everybody
laughed, but they prevailed."

Nissan was profitable in every region in the world except Japan,
Ghosn said, noting that the yen's current level was unreasonable
and a "handicap". Its bigger rival, Toyota Motor Corp, is losing
about $3 billion a year in Japan. (Editing by Joseph Radford)

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